LG Electronics India has broken the long-standing trend of large IPOs (Rs 10,000 crore and above) delivering weak listings, with its shares debuting at a premium of over 50% on domestic bourses. The previous highest listing gain was held by state-owned Coal India, whose IPO launched in 2010.
This strong debut also pushed LG Electronics India’s market capitalisation to Rs 1.16 lakh crore (around $13.13 billion), significantly surpassing its South Korean parent, LG Electronics Inc, which is valued between $8 and $9 billion in Seoul.
Except for HDB Financial Services and Swiggy, recent large IPO listings in India have underperformed. Hyundai Motor India Ltd, which launched a Rs 27,859 crore IPO last year, the largest in India’s capital market history, debuted at a discount of about 1.5%. Similarly, LIC’s Rs 20,557 crore IPO launched in May 2022 was listed at an 8% discount.
Paytm’s Rs 18,300 crore IPO in November 2021 debuted with a discount of over 9% and dropped more than 20% within the first 15 minutes of trading. Shares of Tata Capital, which launched a Rs 15,512 crore IPO last week, listed at Rs 330 on the National Stock Exchange (NSE) on Monday, a modest premium of 1.23% over its IPO price.
Analysts stated multiple reasons for LG’s blockbuster debut, especially the issue being available at an attractive valuation and LG’s dominant position in India’s electronic & home appliance market. Further, the recent GST rate cut on consumer goods is expected to lift near-term growth for appliance makers.
LG Electronics shares were listed at Rs 1715 on the BSE on Tuesday, a premium of Rs 575 or 50.44% over the issue price of Rs 1140. On the NSE, LG Electronics' share price debuted at a premium of 50.01% at Rs 1,710 and settled 48% higher from its IPO price on the debut day at Rs 1,682 per share.
The strong listing came after LG Electronics recorded one of the highest subscriptions ever for a large Indian IPO, with its initial share sale oversubscribed 54 times. The IPO set a new record by attracting bids worth Rs 4.43 lakh crore at the top end of its price band of Rs 1,080 to Rs 1,140 per share.
Shivani Nyati, Head of Wealth at Swastika Investmart, said that given the sharp listing premium, investors are advised to book partial profits to secure gains while retaining the remaining portion for potential long-term appreciation. A stop-loss near ₹1,400 is recommended to safeguard against market volatility.
Brokerage firm Motilal Oswal Financial Services said that India's home appliances and consumer electronics market (excluding mobile phones) is estimated to post a CAGR of 14% over CY24-29 and LG Electronics India (LGEIL), with its leadership across key product categories, is well-positioned to capitalise on this growth opportunity. LG holds strong market share in premium segments, such as OLED TVs (63%), front-load washing machines (37%), and side-by-side refrigerators (43%).
“We initiate coverage on LGEIL with a BUY rating and a TP of Rs 1,800, premised on 40x FY28E EPS. LGEIL should trade at higher multiple, given the strong return ratios, higher OCF conversion and a strategic focus on localization,” said Motilal Oswal.
